Celebrate the New Year with FAFSA

Everyone wants the kind of financial aid that you don’t pay back. In college planning, we call it "gift aid."

Gift aid includes grants, merit awards, and scholarships. Filing a FAFSA (Free Application for Federal Student Aid) is the most comprehensive way to access merit based gift aid, entitlements, need based awards, work study and student loans. If students and parents choose to borrow money for college, federally subsidized loans are usually the best choice, since repayment and interest do not begin until the student leaves college.

Filing for federal and student aid for college (need based and/or merit based) begins with filing the FAFSA; and the FAFSA filing period begins January 1st.

The FAFSA (www.fafsa.gov) is used to calculate the federal government’s idea of how much the family must pay toward education.

The formula is something like this: Cost of Education - Family Contribution = Need

The cost of the education is determined by many factors including tuition, fees, housing, books, supplies and even travel expenses. Based on the methodology of how need is determined by the feds, sometimes students actually pay less out of their own pockets if they attend a higher priced school. This is why it’s so important to file a FAFSA regardless of income, family size or neighborhood rumor.

The family is the parent or parents with whom the child lives. In shared custody, it’s the parent with whom the child spends the most time. The family income of the parent must include the spouse’s income. The family size includes children and step-children in the home where the student lives. Unmarried parents do not include non-related members in the household.

Need is demonstrated once the family contribution has been calculated by a formula called the Congressional Methodology. Families are expected to pay school costs equal to the family contribution. The demonstrated “need” becomes the basis for need-based aid.

Don’t disqualify yourself! Regardless of your family’s financial success it is wise to file the FAFSA form.  FAFSA information is used for work study jobs, subsidized loans and sometimes even college merit awards (money given based on something other than financial need) begin with information on the FAFSA.

The federal government offers a variety of funding possibilities, and California students also have access to Cal Grants, offered by the State of California. Students apply for both federal and state money with the FAFSA. Cal Grants require a supplementary grade point verification form, which must be completed by the school registrar. Cal Grant filing periods are January 1 through March 2 of each year, so while the FAFSA can be submitted after the March 2 deadline, California kids should always submit the FAFSA and the Cal Grant g.p.a verification form prior to March 2nd.  I always recommend that students set a FAFSA filing deadline of Valentine’s Day. This gives us plenty of time to resolve any questions or issues that might arise in filing. We all love money – so Valentine’s Day is a great way to remember to file on time.

The FAFSA is available January 1st each year on-line www.fafsa.gov . Be certain you are on the official FAFSA website, since at the dawn of the internet years ago, some very clever entrepreneur purchased fafsa.com  which is a for-profit site that files the FAFSA for you, (after you’ve filled it out) for about $100! Always remember the first word in FAFSA is FREE!

To file a FAFSA takes about a half hour. You’ll need your 2012 income tax forms, your social security number, the names of the colleges where you gave applied, and a personal identification number for your electronic signature, which is issued on the FAFSA website. Parents, who have more than one child in college, will file the same information for both children, but on different forms; and be sure it’s the same information!

Your children must also file FAFSAs individually. Students will need their 2012 income tax forms, their parents’ and their own social security numbers, and an electronic signature PIN number. Students and parents must file a FAFSA for each year of college.

After filing, students will receive a Student Aid Report which tells what kind of aid they qualify for. Following that, the schools where students have been accepted will send financial aid offers which include a list of different types of aid. Students can then compare which college is actually the best value as they decide where to attend.

So if you’re a future college student, or parent of a future college student add one more item to your New Year’s resolution list - Get started on the FAFSA.

www.fafsa.gov            Filing period January 1 – March 2, 2012